Berjaya Land Bhd (Trading Buy)

• After falling from a peak of RM0.52 in April 2021 to a low of RM0.195 in April 2022, plotting lower lows and lower highs along the way, BJLAND shares saw the formation of a long Marubozu candlestick yesterday.

• And with the emergence of the Marubozu candlestick, the stock has closed above the Keltner Channel, indicating the presence of an underlying bullish momentum.

• We believe the stock will likely strengthen further on the back of the positive technical signals arising from: (i) the MACD indicator crossing above the zero line and trending upwards to pull away from the signal line, and (ii) the DMI Plus widening its gap from the DMI Minus.

• Thus, the stock could rise further to challenge our resistance levels of RM0.265 (R1; 13% upside potential) and RM0.305 (R2; 30% upside potential).

• We have pegged our stop loss at RM0.205, which represents a downside risk of 13%.

• Business-wise, BJLAND’s core activities are: (i) gaming & lottery management, (ii) hotels, resorts, recreation development and vacation timeshare, (iii) property investment & development, and (iv) motor retailing.

• For 1HFY22, the group’s net loss widened by 34% to RM98.2m from RM73.5m in 1HFY21 mainly due to a significant drop in revenue in the lottery operation as the imposition of lockdown from June 2021 to September 2021 had resulted in 37 draws being cancelled.

• Nonetheless, in tandem with an anticipated recovery in domestic tourism and consumer spending in 2022, the group is expected to see an earnings pick-up in its hotels and resorts segment (which currently contributes c.10% to overall revenue) and gaming business.

Sunway REIT (Trading Buy)

• Chart-wise, SUNREIT’s share price recently reversed its direction to climb higher after trending downwards since September 2020.

• Following the formation of a golden cross in mid-April 2022, the 20-day SMA has now emerged as its resistance-turned support line.

• With both the MACD and ADX indicators currently trending higher, we believe that the stock will likely strengthen further to challenge our resistance levels of RM1.65 (R1; 12% upside potential) and RM1.75 (R2; 19% upside potential).

• On the downside, our stop loss price has been set at RM1.33, which translates to a downside risk of 10%.

• Business-wise, SUNREIT – backed by its diversified portfolio of retail malls, hotels, offices, hospitality and other real estate assets – is seen as a post-pandemic economic reopening play.

• Reflecting the resilience of its businesses, for the 18MFY21 period (following a change in financial year-end to December), the group’s average occupancy rate for its retail segment remained stable at 97% compared to its pre-pandemic level of 96% in FY19.

• Going forward, on the back of improved consumer spending and the removal of movement restrictions, consensus is predicting SUNREIT to report a higher core net profit of RM262.2m in FY22 and RM296.5m in FY23.

• And based on consensus DPS estimates of 7.0 sen for FY Dec 22 and 8.0 sen for FY Dec 23, the stock currently offers attractive dividend yields of 4.8% and 5.4%, respectively.

Source: Kenanga Research - 13 May 2022